How much do you need to retire?

By Carl Spiess, CFP, CIM, FMA, FCSI, MBA, Director, Wealth Management

The following research may be of interest to you, whether you think you are too young to set a retirement target, or if
retirement is fast approaching for you, or even if you have retired. There are a number of ways to target a retirement income, and
we would like to discuss the numbers 80% / 10x / 5% and how they link together to help set a retirement income goal.

80% replacement ratio

Historically, advisors have recommended that clients target 60% to 80% of their pre retirement income as their post
retirement income goal. But some critics feel that 80% is far too high a number, since in retirement many expenses like
commuting to work will be much lower, and hopefully children have left the nest and the mortgage will be paid off. So
what is the right target? Recent numbers from Statistics Canada suggest that most Canadians actually retire with incomes
that level off just under 80% of what they were earning when they were 55 years of age (see chart, below). And in
general, when we meet with clients, we find that having more available income in retirement is generally always preferable
to having less. Especially if there are grandchildren to spoil, travel to be taken, or health care expenses for parents on
the horizon.

10x final salary

If you have asked us for help with life insurance, we generally begin by looking at coverage based on the simple
10x current salary for clients with mortgages and young children. The lump sum of 10x income could then be used to set
up and income stream to replace your salary should you not be able to provide for your family. As it turns out, having
a retirement nest egg target of 10x your final salary also works very well for setting a retirement goal that can provide
an income stream.

5% withdrawal rate on a fixed amount

The most common response to the question "How much do you need to retire?" is a quick "If I had a million dollars"...
Is it really that much? Years ago, thinking that 10% would be a reasonable withdrawal rate had many portfolios declining too
quickly. Research has shown that a 5% withdrawal rate is much more sustainable. It is likely that this 5% is the reason that
Guaranteed Minimum Withdrawal Benefit plans (GMWB) plans (like Manulife's Income plus and SunWise Elite) offer 5% as their
guarantees. What this means is that yes, if you need a $50,000 per year income, 5% of $1,000,000 will provide that amount.
See the chart, below, for how long income can last at various withdrawal rates on a typical balanced portfolio.

Bringing 80% / 10x and 5% together

So let's bring some of these concepts together, and back to the real world for Canadians. From the chart, below,
statistics show an average
annual pre-retirement income of $62,500 in Canada (based on active employees in Group Savings Plans with Fidelity
investments). We are comfortable that Canada Pension Plan (CPP) and Old Age Security (OAS) will provide $16,685. So if
we target 80% of the $62,500 that would be $50,000 of income required, leaving a $33,315 income shortfall. If we had a
portfolio with $666,300 and set up 5% withdrawals, that would provide a sustainable amount. (If a $666,300 portfolio is
not realistic, then downsizing a mortgage free home or looking at a reverse mortgage could help supplement income.) See
the bar chart and notice how a $666,300 portfolio is roughly 10x the pre-retirement salary of $62,500, nicely tying the
3 numbers together.

What is your number?

To help determine your retirement target, or sustainable retirement income figure, please use our investment tools,
or contact us to help set up or update your retirement plan. We can put together a plan for accumulating and then
sustainably drawing a retirement income.

Due diligence

Meeting with Canadian bank heads

By Carl Spiess, CFP, CIM, FMA, FCSI, MBA, Director, Wealth Management

Two weeks ago, as part of the Scotia Financials Summit 2009 conference, I was invited to attend small question and
answer sessions with the various bank heads. The majority of the questions were being asked by Shane Jones, co-manager
of the 4-star ranked Scotia Canadian Dividend fund.

It was very comforting to hear about the strong results that Canadian banks continue to deliver, and the sound
management that has made our banks shine as the best and most well respected in the world. Canadian bank shares are
all approaching their 52 week highs, and this reflects the lower than expected loan losses and gross impaireds. Canadian
banks have maintained their dividends through this period, and continue to show signs of sustainable growth.

Bank shares make up a significant portion of the Canadian index, and are core holdings in many dividend and large cap
mutual funds, like the Scotia Canadian Dividend fund, one of our core recommended funds. Keeping an eye on the underlying
investments in your portfolio, and access to, contact with, and monitoring the managers who run your investment funds is
a key part of the service that we provide for you.

More on Scotia Financials Summit 2009

Did you know that October 5-12 is Financial Planning Week...?

As part of an ongoing campaign to make financial planning more a part of Canadians' lives, the Financial
Planners Standards Council (FPSC) has declared October 5-12 as the inaugural Financial Planning Week.

In its inaugural year, Financial Planning Week will raise awareness and invite a call to action to all stakeholders
to collaborate and enact meaningful change for the benefit of all Canadians. Concurrently, similar themed weeks are
being held in Quebec, and the US.

Get started thinking about your financial situation today! Here are some ways you can "celebrate" Financial Planning Week.

Create - and stick to - a weekly budget

Keep all your receipts to find out how much money you are spending on "the little things"

Establish an emergency fund

Review your insurance coverage

Calculate your net worth

Look up three financial terms that you've never understood

Teach your child to save 10% of their gift money

Think about preparing a will and a living will

Understand your employee benefits package

Contact us if you have any questions or need help with any of the above tasks....

More on Financial Planning

More funds moving to fixed expenses

Operating expenses are part of a Fund's management expense ratio (MER). Currently these expenses vary from year to year,
making MERs difficult to predict. Fixed administration fee structures have been adopted by a number of Canada's largest
mutual fund companies. Recently Northwest/Ethical mailed unitholders about capping their expenses, and Fidelity will be
doing the same shortly.

If the proposals are approved, it will be easier for investors to estimate the costs of investing in mutual funds that
have fixed their expenses. We believe this is an appropriate time for funds to continue with this trend and make these
changes because they will provide investors with greater cost certainty in uncertain times.

More on fixed expenses

Mackenzie Financial announces Canada's Top Teen Philanthropist

Do you know a 13-19 year old teen who donates time, money or both to a charitable cause? Mackenzie Investments is
looking for Canada's Top Teen Philanthropist. Cash awards up to $5,000 dollars for the teen and their charity are available.

Scotiabank most sustainable

Scotiabank has joined the group of 11 blue-chip Canadian companies recognized on the 2009 Dow Jones Sustainability World
Index (DJSI World). The 317 global enterprises acknowledged on the DJSI World comprise the top 10 per cent of the largest
2,500 companies listed on the Dow Jones Global Total Stock Market Index. The annual initiative reviews economic,
environmental and social performance such as corporate governance, risk management, climate change mitigation, supply
chain standards and labour practices.

® Registered trademark of The Bank of Nova Scotia, used under licence. ™ Trademark of The Bank of Nova Scotia, used under licence. Scotia Wealth Management™ consists of a range of financial services provided by The Bank of Nova Scotia (Scotiabank®); The Bank of Nova Scotia Trust Company (Scotiatrust®); Private Investment Counsel, a service of 1832 Asset Management L.P.; 1832 Asset Management U.S. Inc.; Scotia Wealth Insurance Services Inc.; and ScotiaMcLeod®, a division of Scotia Capital Inc. ("SCI"). Wealth advisory and brokerage services are provided by ScotiaMcLeod, a division of SCI. Insurance services are provided by Scotia Wealth Insurance Services Inc., the insurance subsidiary of SCI. When discussing life insurance products, ScotiaMcLeod advisors are acting as Life Underwriters (Financial Security Advisors in Québec) representing Scotia Wealth Insurance Services Inc. SCI is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.

The Spiess McGlade Team is a personal trade name of Carl Spiess and Allan McGlade.